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Table of Contents
Table of Contents
Page 2
Chart: Highlights
Highlights
$400,000
$360,000
$320,000
$280,000
Sales
$240,000
Gross Margin
$200,000
Net Profit
$160,000
$120,000
$80,000
$40,000
$0
2010
2011
2012
1.1 Objectives
The Sorcerer's Accountant seeks to launch a new line of services - small business bookkeeping which will be offered to the same ongoing clients as Sorcerer's Accounting currently seeks.
Sorcerer's Accounting has set the following objectives:
To launch the bookkeeping services slowly, beginning with two part-time bookkeepers
Page 1
To achieve bookkeeping service annual revenues equal or greater to the current total
revenues within three years (effectively doubling revenue)
To achieve net profit of $60,000 in three years
To employ 8 part-time bookkeepers in three years
1.2 Mission
The Sorcerer's Accountant seeks to provide a full suite of tax and management accounting
services for small businesses in Chicago, Illinois, allowing business owners to not only save
money over in-house accounting and ensure their compliance with tax laws, but to make
valuable management decisions from their numbers.
1.3 Keys to Success
The keys to success for the accounting business include:
Page 2
2008
2009
$100,000
$75,000
75.00%
$55,000
30
$150,000
$112,500
75.00%
$67,500
25
$175,000
$131,250
75.00%
$82,750
28
2007
2008
2009
$15,000
$4,167
$5,000
$24,167
$17,500
$6,250
$5,000
$28,750
$20,000
$7,292
$5,000
$32,292
$0
$0
$0
$0
$0
$0
$0
$0
$0
$24,167
$28,750
$32,292
Accounts Payable
Current Borrowing
Other Current Liabilities (interest free)
Total Current Liabilities
$4,583
$0
$0
$4,583
$5,625
$0
$0
$5,625
$6,896
$0
$0
$6,896
Long-term Liabilities
Total Liabilities
$0
$4,583
$0
$5,625
$0
$6,896
$10,000
($10,417)
$20,000
$19,583
$10,000
($51,875)
$65,000
$23,125
$10,000
($83,554)
$98,950
$25,396
$24,167
$28,750
$32,292
30
$50,000
12.00
30
$75,000
12.00
30
$87,500
12.00
Sales
Gross Margin
Gross Margin %
Operating Expenses
Collection Period (days)
Balance Sheet
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Current Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Capital and Liabilities
Other Inputs
Payment Days
Sales on Credit
Receivables Turnover
Page 3
Past Performance
$180,000
$160,000
$140,000
$120,000
Sales
$100,000
Gross
$80,000
Net
$60,000
$40,000
$20,000
$0
2007
2008
2009
3.0 Services
Current services offered by The Sorcerer's Accountant include:
Tax Services:
Tax preparation
Tax planning
Addressing tax problems (audit representation, back taxes owed, payroll tax problems, IRS
issues, bankruptcy)
Audits
Cost and Margin Analysis
Financial Projection
Setup for credit card processing
QuickBooks Services
QuickBooks
QuickBooks
QuickBooks
QuickBooks
Current services are either provided entirely by Max Greenwood or available through resources
on the The Sorcerer's Accountant website. Greenwood will provide referrals to credit card
processing companies or some speciality consultants when the need calls for it, but focuses his
work on general small business services of use to the widest variety of businesses.
Page 4
Payroll processing
Accounts payable (entry, bill paying)
Accounts receivable (entry, invoicing, deposits, collection)
Sales tax processing
Bank reconciliations
Inventory management
Financial statement preparation
Other financial reporting
These bookkeeping services will be at a rate of $30 per hour/per bookkeeper for clients. Clients
would pay $20 -$25, once benefits and taxes are factored in, for an in-house, part-time
bookkeeper, and would still be responsible for training, oversight, and management in that
case. The Sorcerer's Accountant's rate is very economical once this is taken into account.
The new services will be performed by part-time student bookkeepers who are current
undergraduate accounting majors with up to 20 hours per week free to work. Each business will
have a consistent bookkeeper assigned to it. The bookkeepers will be trained by Max
Greenwood directly in proper techniques. They will all be students in the top 20% of their class
with at least one professional recommendation and one educational
(professor) recommendation. This is a business model which has been successful in other cities
where there is ample student labor, such as New York City.
To add additional value, the bookkeeping manager, a graduate student pursuing an MBA in
accounting, will supervise and audit the work of the bookkeepers, answering their questions
when questions arise, and providing quality assurance. The bookkeeping manager will review
the QuickBooks files and reports created by the bookkeepers to ensure that they follow proper
formats and are prepared correctly.
4.0 Market Analysis Summary
The small business accounting market consists of virtually every small business in the United
States. As businesses grow larger than one person sole proprietorships, they generally require
expert help with at least their tax preparation, and often with additional bookkeeping and
accounting services. Even many non-employer sole proprietorships will use accounting help at
some point. While some small businesses hire bookkeepers or CFOs directly, many successfully
outsource these types of services.
The accounting service market as a whole includes the following:
Corporate accounting and auditing firms: The "Big Four" (PricewaterhouseCoopers, Ernst &
Young, Deloitte Touche Tohmatsu, and KPMG) and their competitors
Small business accounting
Personal accounting (by H & R Block and the like)
The National Society of Accountants states that it represents more than 30,000 independent
practitioners who provide services to 19 million individuals and businesses. The continuing
evolution of U.S. tax laws guarantees work for tax accountants on an ongoing basis. The
market is somewhat recession-proof, as businesses which are contracting use accountants to
help cut spending and limit tax liability just as growing businesses will use accountants to
launch and prepare financials for expansion, mergers and acquisitions.
Page 5
2010
2011
2012
2013
2014
4%
4%
50,000
25,000
52,000
26,000
54,080
27,040
56,243
28,122
58,493
29,247
4.00%
4.00%
4%
10,000
10,400
10,816
11,249
11,699
4.00%
4.00%
85,000
88,400
91,936
95,614
99,439
4.00%
Growth
CAGR
Page 6
Non-employer Firms
Very Small Businesses (2 to 10 employees)
Other Small Businesses (11 to 99 employees)
Page 7
For bookkeeping services, the business also must compete indirectly against the prospect of
businesses hiring their own part-time bookkeepers. This gives businesses the advantage of
greater control and perhaps development of a future full-time employee. If the hire works out,
the cost can be lower for a business than an outside service. However, this can lead to
employees who are not as well-educated or experienced as bookkeepers through a bookkeeping
service who have worked with a range of businesses. Generally, the cost is lower in the long
run with a bookkeeping service, as training is done more systematically and
supervisors are more regimented and experienced.
To choose between competitors, factors considered by clients include:
Positive references (especially from known sources or other businesses in the same
industry)
CPA leadership (protects the businesses, even if work is being performed by non-CPAs)
Price (often low on the list of considerations, as long as price is not exorbitantly high)
Most of these marketing activities will be executed by the marketing services firm contracted by
Sorcerer's Accounting as Greenwood does not have the time or expertise to execute them
himself.
The website will be expanded with additional information about best practices of bookkeeping
services. Max Greenwood will devote 40 hours to developing this content within two months of
the launch of the service.
Page 8
The marketing messages will focus on the economics of the decision to use outsourced
bookkeepers from The Sorcerer's Accountant and the advantage of CPA oversight with
Greenwood's experience and track record.
Marketing also encompasses the search for student bookkeepers. Job listings will be posted at
local universities and promote the learning involved in the position and the "leg up" it can give
students for accounting positions upon graduation. We will recruit the best student bookkeepers
possible. The costs associated with this hiring are only the time of Max Greenwood.
Page 9
Page 10
2011
2012
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Total Unit Sales
125
60
57
1,570
1,812
130
63
59
3925
4,177
135
65
62
7850
8,112
Unit Prices
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
2010
$750.00
$1,000.00
$300.00
$30.00
2011
$750.00
$1,000.00
$300.00
$30.00
2012
$750.00
$1,000.00
$300.00
$30.00
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Total Sales
$93,600
$60,300
$17,100
$47,100
$218,100
$97,500
$63,000
$17,700
$117,750
$295,950
$101,250
$65,000
$18,600
$235,500
$420,350
2010
$37.50
$30.00
$0.00
$15.00
2011
$37.50
$30.00
$0.00
$15.00
2012
$37.50
$30.00
$0.00
$15.00
$4,680
$1,809
$0
$23,550
$30,039
$4,875
$1,890
$0
$58,875
$65,640
$5,063
$1,950
$0
$117,750
$124,763
Unit Sales
Sales
Page 11
Sales Monthly
$21,000
$18,000
Tax Preparations
$15,000
$12,000
QuickBooks Services
$9,000
Bookkeeping Hours
$6,000
$3,000
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
$0
Sales by Year
$400,000
$350,000
Tax Preparations
$300,000
$250,000
QuickBooks Services
$200,000
Bookkeeping Hours
$150,000
$100,000
$50,000
$0
2010
2011
2012
Page 12
6.4 Milestones
To execute the milestones listed, Max Greenwood will make liberal use of an outside marketing
service firm (OF denotes outside firm on the table) which will manage the execution of the
marketing activities listed. Greenwood will directly execute the sales activities listed through his
work with clients.
$4,000 of these costs will be incurred at the end of 2009 and are included in operating costs on
the past performance table.
Table: Milestones
Milestones
Milestone
Redevelop Website
List Website on Databases
Change Yellow Pages ads
Search Engine Marketing
Expand Website Best Practices
Section
Redevelop Brochure
Print New Brochures
Promotion to Clients
Promotion to Client Referrals
Develop Print Ad
Run first print ads
Totals
Start Date
12/1/2009
1/1/2010
1/1/2010
1/1/2010
12/1/2009
End Date
1/1/2010
1/15/2010
1/15/2010
12/31/2010
2/28/2010
Budget
$2,500
$500
$500
$12,000
$0
Manager
MG (OF)
MG (OF)
MG (OF)
MG (OF)
MG
Department
Marketing
Marketing
Marketing
Marketing
Marketing
12/1/2009
1/1/2010
1/1/2010
2/1/2010
12/1/2009
2/1/2010
1/1/2010
1/15/2010
1/31/2010
2/28/2010
12/15/2009
2/15/2010
$1,000
$3,000
$0
$0
$500
$5,000
$25,000
MG (OF)
MG (OF)
MG
MG
MG (OF)
MG (OF)
Marketing
Marketing
Sales
Sales
Marketing
Marketing
Chart: Milestones
Milestones
Redevelop Website
List Website on Databases
Change Yellow Pages ads
Search Engine Marketing
Expand Website Best Practices Section
Redevelop Brochure
Print New Brochures
Promotion to Clients
Promotion to Client Ref errals
Develop Print Ad
Run first print ads
DecJan `10Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Page 13
2011
2012
$1,200
$60,000
$24,000
$8,400
5
$400
$65,000
$28,800
$9,380
6
$1,600
$70,000
$48,000
$11,800
10
Total Payroll
$93,600
$103,580
$131,400
Page 14
Break-even Analysis
Monthly Units Break-even
Monthly Revenue Break-even
141
$16,926
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost
$120.36
$16.58
$14,595
Page 15
Break-even Analysis
$9,000
$6,000
$3,000
$0
($3,000)
($6,000)
($9,000)
($12,000)
20
40
60
80
100
120
140
160
180
200
220
Page 16
2011
2012
Sales
Direct Cost of Sales
Other Cost of Sales
Total Cost of Sales
$218,100
$30,039
$0
$30,039
$295,950
$65,640
$0
$65,640
$420,350
$124,763
$0
$124,763
Gross Margin
Gross Margin %
$188,061
86.23%
$230,310
77.82%
$295,588
70.32%
$93,600
$38,500
$0
$18,000
$2,400
$5,000
$14,040
$3,600
$103,580
$20,000
$0
$18,720
$2,496
$7,000
$15,537
$4,000
$131,400
$20,000
$0
$19,469
$2,596
$8,000
$19,710
$6,000
$175,140
$171,333
$207,175
$12,921
$12,921
$0
$3,876
$58,977
$58,977
$0
$17,693
$88,413
$88,413
$0
$26,524
$9,045
4.15%
$41,284
13.95%
$61,889
14.72%
Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Software and Computer Expenses
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
Profit Monthly
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)
($8,000)
($10,000)
($12,000)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Page 17
Profit Yearly
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2010
2011
2012
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Page 18
$280,000
$240,000
$200,000
$160,000
$120,000
$80,000
$40,000
$0
2010
2011
2012
Page 19
2011
2012
$109,050
$105,612
$214,662
$147,975
$144,145
$292,120
$210,175
$204,055
$414,230
$0
$0
$0
$0
$0
$0
$0
$214,662
$0
$0
$0
$0
$0
$0
$0
$292,120
$0
$0
$0
$0
$0
$0
$0
$414,230
2010
2011
2012
$93,600
$111,643
$205,243
$103,580
$149,376
$252,956
$131,400
$220,816
$352,216
$0
$0
$0
$0
$0
$0
$0
$205,243
$0
$0
$0
$0
$0
$0
$20,000
$272,956
$0
$0
$0
$0
$0
$0
$60,000
$412,216
$9,418
$29,418
$19,164
$48,582
$2,013
$50,596
Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Page 20
Chart: Cash
Cash
$28,000
$24,000
$20,000
$16,000
$12,000
$8,000
Cash Balance
$4,000
$0
($4,000)
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
($8,000)
Page 21
2011
2012
$29,418
$10,730
$5,000
$45,148
$48,582
$14,560
$5,000
$68,142
$50,596
$20,680
$5,000
$76,276
$0
$0
$0
$45,148
$0
$0
$0
$68,142
$0
$0
$0
$76,276
2010
2011
2012
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$10,708
$0
$0
$10,708
$12,418
$0
$0
$12,418
$18,663
$0
$0
$18,663
Long-term Liabilities
Total Liabilities
$0
$10,708
$0
$12,418
$0
$18,663
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
$10,000
$15,396
$9,045
$34,441
$45,148
$10,000
$4,441
$41,284
$55,724
$68,142
$10,000
($14,276)
$61,889
$57,613
$76,276
Net Worth
$34,441
$55,724
$57,613
Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Page 22
Table: Ratios
Ratio Analysis
2010
2011
2012
Industry Profile
24.63%
35.69%
42.03%
3.34%
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
23.77%
11.07%
100.00%
0.00%
100.00%
21.37%
7.34%
100.00%
0.00%
100.00%
27.11%
6.56%
100.00%
0.00%
100.00%
14.34%
53.58%
70.11%
29.89%
100.00%
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
23.72%
0.00%
23.72%
76.28%
18.22%
0.00%
18.22%
81.78%
24.47%
0.00%
24.47%
75.53%
37.94%
54.53%
92.47%
7.53%
100.00%
86.23%
82.08%
17.65%
5.92%
100.00%
77.82%
63.87%
6.76%
19.93%
100.00%
70.32%
55.60%
4.76%
21.03%
100.00%
59.56%
28.35%
1.21%
8.19%
4.22
4.22
23.72%
37.52%
28.62%
5.49
5.49
18.22%
105.84%
86.55%
4.09
4.09
24.47%
153.46%
115.91%
1.24
1.18
92.47%
696.33%
52.41%
Sales Growth
Percent of Total Assets
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
2010
2011
2012
4.15%
26.26%
13.95%
74.09%
14.72%
107.42%
n.a
n.a
10.16
29
10.78
29
4.83
10.16
31
12.17
28
4.34
10.16
31
12.17
25
5.51
n.a
n.a
n.a
n.a
n.a
0.31
1.00
0.22
1.00
0.32
1.00
n.a
n.a
$34,441
0.00
$55,724
0.00
$57,613
0.00
n.a
n.a
0.21
24%
3.21
6.33
0.00
0.23
18%
4.31
5.31
0.48
0.18
24%
2.98
7.30
0.97
n.a
n.a
n.a
n.a
n.a
Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Page 23
Appendix
Table: Sales Forecast
Sales Forecast
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Tax Preparations
10
11
16
10
10
10
10
10
10
10
10
QuickBooks Services
Bookkeeping Hours
50
70
90
100
120
140
160
180
200
220
240
Unit Sales
17
Unit Prices
Jan
Tax Preparations
67
Feb
88
Mar
113
Apr
121
May
141
Jun
161
Jul
181
Aug
201
Sep
221
Oct
241
Nov
261
Dec
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$750.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$300.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
$30.00
Tax Preparations
$6,000
$7,200
$8,400
$12,000
$7,500
$7,500
$7,500
$7,500
$7,500
$7,500
$7,500
$7,500
$4,800
$3,600
$2,400
$1,500
$6,000
$6,000
$6,000
$6,000
$6,000
$6,000
$6,000
$6,000
QuickBooks Services
$1,200
$1,200
$1,200
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$0
$1,500
$2,100
$2,700
$3,000
$3,600
$4,200
$4,800
$5,400
$6,000
$6,600
$7,200
$12,000
$13,500
$14,100
$17,700
$18,000
$18,600
$19,200
$19,800
$20,400
$21,000
$21,600
$22,200
Bookkeeping Hours
Total Sales
Direct Unit Costs
Tax Preparations
Cost Accounting Analysis
QuickBooks Services
Bookkeeping Hours
Jan
5.00%
3.00%
0.00%
50.00%
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
$37.50
$30.00
$0.00
$15.00
Tax Preparations
$300
$360
$420
$600
$375
$375
$375
$375
$375
$375
$375
$375
$144
$108
$72
$45
$180
$180
$180
$180
$180
$180
$180
$180
QuickBooks Services
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Bookkeeping Hours
$0
$750
$1,050
$1,350
$1,500
$1,800
$2,100
$2,400
$2,700
$3,000
$3,300
$3,600
$444
$1,218
$1,542
$1,995
$2,055
$2,355
$2,655
$2,955
$3,255
$3,555
$3,855
$4,155
Page 1
Appendix
Table: Personnel
Personnel Plan
Jan
Bookkeeper training-period wages
Max Greenwood
Bookkeeper Manager
Benefits
Total People
Total Payroll
10%
Feb
Mar
Apr
May
Jun
Aug
Sep
Oct
Nov
$800
$0
$0
$0
$0
$0
$400
Jul
$0
$0
$0
$0
Dec
$0
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$700
4
$700
4
$700
4
$700
4
$700
4
$700
4
$700
5
$700
5
$700
5
$700
5
$700
5
$700
5
$8,500
$7,700
$7,700
$7,700
$7,700
$7,700
$8,100
$7,700
$7,700
$7,700
$7,700
$7,700
Page 2
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Jan
Sales
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$12,000
$13,500
$14,100
$17,700
$18,000
$18,600
$19,200
$19,800
$20,400
$21,000
$21,600
$22,200
$444
$1,218
$1,542
$1,995
$2,055
$2,355
$2,655
$2,955
$3,255
$3,555
$3,855
$4,155
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$444
$1,218
$1,542
$1,995
$2,055
$2,355
$2,655
$2,955
$3,255
$3,555
$3,855
$4,155
$11,556
$12,282
$12,558
$15,705
$15,945
$16,245
$16,545
$16,845
$17,145
$17,445
$17,745
$18,045
96.30%
90.98%
89.06%
88.73%
88.58%
87.34%
86.17%
85.08%
84.04%
83.07%
82.15%
81.28%
Expenses
Payroll
$8,500
$7,700
$7,700
$7,700
$7,700
$7,700
$8,100
$7,700
$7,700
$7,700
$7,700
$7,700
$10,000
$3,000
$3,000
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$5,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,275
$2,500
$1,155
$100
$1,155
$100
$1,155
$100
$1,155
$100
$1,155
$100
$1,215
$100
$1,155
$100
$1,155
$100
$1,155
$100
$1,155
$100
$1,155
$100
$28,975
$13,655
$13,655
$13,155
$13,155
$13,155
$13,615
$13,155
$13,155
$13,155
$13,155
$13,155
($17,419)
($1,373)
($1,097)
$2,550
$2,790
$3,090
$2,930
$3,690
$3,990
$4,290
$4,590
$4,890
($17,419)
($1,373)
($1,097)
$2,550
$2,790
$3,090
$2,930
$3,690
$3,990
$4,290
$4,590
$4,890
$0
$0
$0
$0
$0
$0
$0
$0
$0
$765
$837
$927
$879
$1,107
$1,197
$1,287
$1,377
$1,467
Marketing/Promotion
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Software and Computer
Expenses
Interest Expense
Taxes Incurred
15%
$0
($5,226)
Net Profit
($12,193)
Net Profit/Sales
-101.61%
$0
($412)
($961)
-7.12%
$0
($329)
($768)
-5.45%
$1,785
$1,953
$2,163
$2,051
$2,583
$2,793
$3,003
$3,213
$3,423
10.08%
10.85%
11.63%
10.68%
13.05%
13.69%
14.30%
14.88%
15.42%
Page 3
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cash Received
Cash from Operations
Cash Sales
$6,000
$6,750
$7,050
$8,850
$9,000
$9,300
$9,600
$9,900
$10,200
$10,500
$10,800
$11,100
$7,492
$6,025
$6,760
$7,110
$8,855
$9,010
$9,310
$9,610
$9,910
$10,210
$10,510
$10,810
$13,492
$12,775
$13,810
$15,960
$17,855
$18,310
$18,910
$19,510
$20,110
$20,710
$21,310
$21,910
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$13,492
$12,775
$13,810
$15,960
$17,855
$18,310
$18,910
$19,510
$20,110
$20,710
$21,310
$21,910
0.00%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$8,500
$7,700
$7,700
$7,700
$7,700
$7,700
$8,100
$7,700
$7,700
$7,700
$7,700
$7,700
Bill Payments
$7,419
$15,396
$6,775
$7,203
$8,219
$8,360
$8,747
$9,065
$9,530
$9,920
$10,310
$10,700
$15,919
$23,096
$14,475
$14,903
$15,919
$16,060
$16,847
$16,765
$17,230
$17,620
$18,010
$18,400
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Dividends
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$15,919
$23,096
$14,475
$14,903
$15,919
$16,060
$16,847
$16,765
$17,230
$17,620
$18,010
$18,400
Page 4
Appendix
Net Cash Flow
($2,427)
Cash Balance
$17,573
($10,321)
$7,252
($665)
$6,588
$1,057
$1,936
$2,250
$2,063
$2,745
$2,880
$3,090
$3,300
$3,510
$7,645
$9,580
$11,830
$13,893
$16,638
$19,518
$22,608
$25,908
$29,418
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Starting
Balances
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
$20,000
$7,292
$5,000
$32,292
$17,573
$5,800
$5,000
$28,373
$7,252
$6,525
$5,000
$18,777
$6,588
$6,815
$5,000
$18,403
$7,645
$8,555
$5,000
$21,200
$9,580
$8,700
$5,000
$23,280
$11,830
$8,990
$5,000
$25,820
$13,893
$9,280
$5,000
$28,173
$16,638
$9,570
$5,000
$31,208
$19,518
$9,860
$5,000
$34,378
$22,608
$10,150
$5,000
$37,758
$25,908
$10,440
$5,000
$41,348
$29,418
$10,730
$5,000
$45,148
$0
$0
$0
$32,292
$0
$0
$0
$28,373
$0
$0
$0
$18,777
$0
$0
$0
$18,403
$0
$0
$0
$21,200
$0
$0
$0
$23,280
$0
$0
$0
$25,820
$0
$0
$0
$28,173
$0
$0
$0
$31,208
$0
$0
$0
$34,378
$0
$0
$0
$37,758
$0
$0
$0
$41,348
$0
$0
$0
$45,148
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$6,896
$0
$0
$6,896
$15,170
$0
$0
$15,170
$6,536
$0
$0
$6,536
$6,929
$0
$0
$6,929
$7,941
$0
$0
$7,941
$8,069
$0
$0
$8,069
$8,446
$0
$0
$8,446
$8,747
$0
$0
$8,747
$9,200
$0
$0
$9,200
$9,577
$0
$0
$9,577
$9,954
$0
$0
$9,954
$10,331
$0
$0
$10,331
$10,708
$0
$0
$10,708
Long-term Liabilities
Total Liabilities
$0
$6,896
$0
$15,170
$0
$6,536
$0
$6,929
$0
$7,941
$0
$8,069
$0
$8,446
$0
$8,747
$0
$9,200
$0
$9,577
$0
$9,954
$0
$10,331
$0
$10,708
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
$10,000
($83,554)
$98,950
$25,396
$32,292
$10,000
$15,396
($12,193)
$13,203
$28,373
$10,000
$15,396
($13,154)
$12,241
$18,777
$10,000
$15,396
($13,922)
$11,474
$18,403
$10,000
$15,396
($12,137)
$13,259
$21,200
$10,000
$15,396
($10,184)
$15,212
$23,280
$10,000
$15,396
($8,021)
$17,375
$25,820
$10,000
$15,396
($5,970)
$19,426
$28,173
$10,000
$15,396
($3,387)
$22,009
$31,208
$10,000
$15,396
($594)
$24,802
$34,378
$10,000
$15,396
$2,409
$27,805
$37,758
$10,000
$15,396
$5,622
$31,018
$41,348
$10,000
$15,396
$9,045
$34,441
$45,148
$25,396
$13,203
$12,241
$11,474
$13,259
$15,212
$17,375
$19,426
$22,009
$24,802
$27,805
$31,018
$34,441
Page 5